Launch of VISION 2030 - We aim to maximize corporate value by improving capital efficiency and contributing to solving social challenges through business portfolio reform leveraging our strengths and optimal capital allocation. Launch of VISION 2030 - We aim to maximize corporate value by improving capital efficiency and contributing to solving social challenges through business portfolio reform leveraging our strengths and optimal capital allocation.

Aiming for record-high profits in fiscal 2021

In fiscal 2020, there was a significant decrease in profit in the first half due to COVID-19, but full-year operating income before special items was up year on year to 85.1 billion yen owing to a recovery in demand and favorable market conditions overseas in the second half. In addition, Group-wide efforts to thoroughly manage inventories and accounts receivable in preparation for downside risks and to keep expenses and investments down resulted in free cash flow of 96.8 billion yen and a net D/E ratio of 0.6. Despite the impact of the COVID-19 pandemic, we were able to maintain and improve upon our stable financial position.

In fiscal 2021, we target a record-high operating income before special items of 141 billion yen and also aim to achieve record-high profits in each of our three target domains. At the same time, by investing in growth businesses that had slowed due to COVID-19 and investing actively in R&D for creating new businesses to further expand our targeted business domains, we will accelerate the transformation of our business portfolio.

Operating income/Operating income before special items

Operating income/Operating income before special items

*Mitsui Chemicals has voluntarily adopted International Financial Reporting Standards (IFRS) from FY2020. Figures for FY2019 and before are reported under Japanese Generally Accepted Accounting Principles (J-GAAP), while figures for FY2020 and later are reported under IFRS.

Cash flows and net D/E ratio

Cash flows and net D/E ratio

*As of announcement on May 13, 2021

ROIC

ROIC

Total investments from FY2016 to FY2020

Total investments from FY2016 to FY2020

Status of major future investments

Major investment projects Capacity
(KTA)
Schedule for launch of
commercial operation
2021 2022 2023
and later
Mobility Performance polymers for ICT applications Increasing of APEL™ capacity
(Japan)
+50%
Health Care Expansion of high refractive index
ophthalmic lens materials
Increasing of MR™ capacity (Japan)    
Food &
Packaging
Expansion of semiconductor manufacturing process tapes Increasing of ICROS™ Tape capacity (Taiwan) 3,800,000m2    
Basic
Materials
Bolstering/expansion of
downstream businesses
Takeover bid for Honshu Chemical Industry Co., Ltd.
Increasing of MDI capacity at Kumho Mitsui Chemicals
(South Korea)
200    
Establishment of new high-performance PP plant (Japan) 200    

Launch of VISION 2030
Aiming to contribute to solving social challenges and achieve growth of the Group

The Mitsui Chemicals Group has formulated VISION 2030, which is based on our review of VISION 2025 and addresses new changes in the external environment, such as rising calls for reducing greenhouse gas (GHG) emissions, moving to a circular economy, and developments in digital transformation (DX). VISION 2030 sets out the following business targets for fiscal 2030: operating income before special items of 250 billion yen, ROIC of 8.0% or higher, net D/E ratio of 0.8 or lower, and ROE of 10% or higher. We have begun working toward achieving these targets from fiscal 2021.
Going forward, it will be increasingly important for us to enhance corporate value by contributing to solving social challenges as a chemical company, rather than focusing on economic value alone. We will need to gain recognition from not only our customers and markets but society as a whole concerning the value of the Group’s efforts such as seizing opportunities arising from transition to a circular economy, rolling out DX, and shifting to solutions-based business models. For example, as Blue Value™ and Rose Value™ products can both expand profits and help solve social challenges in the medium- to long-term, we will expand these products to enact business portfolio reform and improve corporate value.
To support this, we will set aside a total of 1.8 trillion yen for growth investments consisting of internal growth and strategic investments, and will pursue sustainable growth and business portfolio reform. When executing these investments, we will pay attention to the cost of capital and determine whether they are designed in such a way as to generate sufficient returns as a business. This includes leveraging our value chain, which is one of the Group’s strengths. In addition, we will promote our strategy and work on further improving capital efficiency by reducing assets that are not expected to contribute to sustainable growth based on the ROIC for each business and product, and through asset efficiency metric monitoring which includes cash conversion cycle (CCC) as well as adjusting and verifying the rationale behind our cross-shareholdings.

FY2021 large-scale investments*

*Not including alliances, M&A, financial assistance, etc.
For FY2021–2023.

Improving ROIC by expanding sales revenue from Blue Value™ and Rose Value™ products

Strengthening our capital policy and financial management structure to support the implementation of VISION 2030

The basic order of priority in our capital policy is 1) investment for the continuation and growth of business, 2) shareholder returns, and 3) reduction in interest-bearing debt. In addition, we consider the Group’s financial conditions, cash flows, future earnings prospects, and other factors in a comprehensive manner.
In regard to financing, our basic approach is to use operating cash flows and short-term liquidity to cover the investments required for business growth. We may also choose to raise funds from financial and capital markets for investments that are larger in scope. In this way, we are working continuously to achieve stable and flexible financing. At the same time, as we step up the pace of investments under VISION 2030, there may be times when the net D/E ratio temporarily exceeds 1x as interest-bearing debt increases. However, in the medium term, our target will be to keep the net D/E ratio at or below 0.8x and our credit ratings at current levels as we aim to balance financial soundness with minimizing cost of capital.
We recognize the continued importance of shareholder returns as a key management priority, and by combining stable and continuous dividends with flexible acquisition of treasury stock, we aim to achieve a DOE* of 3.0% or more and a total return ratio of 30% or more.

*DOE: Dividends on equity

Enhancing shareholder returns through stable and continuous
dividend payment and flexible acquisition of treasury stock
Targeting a DOE of 3.0% or more and a total return ratio of 30% or more

Targeting a DOE of 3.0% or more and a total return ratio of 30% or more

*1Mitsui Chemicals conducted a 5-to-1 share consolidation on October 1, 2017. Annual dividends per share have been adjusted retrospectively to reflect the share consolidation for all periods presented.

*2Mitsui Chemicals has voluntarily adopted International Financial Reporting Standards (IFRS) from FY2020. Figures for FY2019 and before are profit attributable to owners of parent under Japanese Generally Accepted Accounting Principles (J-GAAP).

As we aim to expand our business globally, financial functions are playing an increasingly important role in the reduction and avoidance of financial risks and achievement of effective corporate governance.
In fiscal 2020, we completed the switch of accounting standards to International Financial Reporting Standards (IFRS) to support our globalization efforts.
In regard to financing, we will also work on new frameworks such as investments for the purpose of contributing to SDGs and ESG financing for our business activities. In addition, to address risks related to fluctuations in interest rates and exchange rates, we will further develop and strengthen an efficient hedging structure by such means as enhancing Group-wide monitoring functions and promoting netting between Group companies.
At the same time, one of the important roles of a company in global business activities is to observe the tax systems of each country and region. The Mitsui Chemicals Group has established a tax policy to properly fulfill this role and will promote a tax strategy based on fair and appropriate tax planning reflecting our business activities.

Enhancing corporate value through dialogue with stakeholders

When establishing individual business strategies for growth, we will work on balancing the short-term view of securing immediate profits with the long-term view of investing strategically for sustainable growth in part to ensure achievement of VISION 2030. We will also incorporate non-financial metrics into our management planning system and respond appropriately to various environmental changes as we aim to realize the ideal vision of the Group.
We believe that dialogue with stakeholders is exceedingly useful from the standpoints of gaining stakeholder understanding of Group efforts and improving the quality of management based on stakeholder feedback. In addition to sharing the details among the Board of Directors and management, we will continue to improve opportunities for dialogue by having management engage in direct dialogue with stakeholders and providing feedback to each department. We will work to maximize corporate value by boldly promoting reform of the Group’s business portfolio, securing a solid financial foundation, improving capital efficiency, and contributing to solving social challenges.

Enhancing corporate value through dialogue with stakeholders

Links

  • Get Adobe Acrobat Reader

    Free and safe download. Adobe Reader latest version